By Jessica Freiburg, Managing Partner
Today, we’re going to talk about when a not-for-profit organization should hire an accountant.
First of all, I want to say that it’s great that you’ve created a not-for-profit organization. Whether you’re helping animals, feeding the hungry, or working with a medical cause, you will be benefiting so many individuals through your work and your passion. We just want to help you to make sure that you know, along the way, what type of financial reporting requirements you may have now that you have created a not-for-profit organization.
Once you’ve applied for your not-for-profit exempt status with the IRS, you will need to file a form 990-N. This is an easy form to file and many are able to file it on their own. It just requires some organizational information that you enter online.
However, once you hit the $50,000 mark in gross revenues or $200,000 in total assets, then you’re going to be required to file the form 990-EZ. The form 990-EZ is a little bit more complicated because it does require some financial information. You’ll want to make sure that you have accurate monthly financial statements and annual financial statements to include in this form. You may need to hire an accounting professional if you think that you need help completing this form accurately and submitting it timely to the IRS.
Once you hit the threshold of over $200,000 in gross revenues or $500,000 in total assets, you’ll be required to file the full Form 990. This form is quite complex even though it’s an informational tax return. It requires quite a bit of financial information as well as organizational information. You will most likely want to hire an accounting professional to help guide you through completing this form accurately and timely. In addition to the tax requirements, you may also be required to submit audited financial statements. This requirement usually comes from either your state or from a grantor. The threshold may vary depending on the state where your organization is registered. If you’re required to submit audited financial statements, make sure you hire an accounting firm that has not-for-profit experience.
The last major area where you may need to hire an accounting firm is to assist you in providing monthly or quarterly financial statements to your board of directors. You will want to make sure that these financial statements are prepared utilizing the accrual basis of accounting and that you’re properly tracking any restricted funding that you receive throughout the year. As a reminder: as your not-for-profit organization continues to grow you will want to make sure that you’re aware of any increased filing requirements or audit requirements that you may have along the way.
If you feel that your not-for-profit organization could benefit from the advice of an accountant, our experienced team is ready to assist you.
Please fill in your contact information if you would like to hear more about Sassetti LLC’s services or career opportunities, or if you would like one of our professional staff to contact you.